The
banks/DFIs are aware that in the present economic and business
scenario in the World, the need for compliance of various
laws and regulations has become imperative to protect the
financial institutions from different kinds of risks. In order to keep the activities of banks in compliance with
the relevant laws and regulations, especially with regard
to Know Your Customer (KYC), and other Anti Money Laundering
Law rules/regulations, it has become necessary to appoint/designate
a “Compliance Officer” (CO) in the financial institutions.
While some of the banks, especially branches of foreign banks
operating in the country, have already appointed/designated
a Compliance Officer, the majority of the banks have not put
up a compliance programme in place.
2.
All Banks/DFIs will now have to put in place a Compliance
Programme to ensure that all relevant laws are complied with,
in letter and spirit, and, thus, minimize legal and regulatory
risks. For this purpose, the Board of Directors, or
Country Manager in case of foreign banks, shall appoint/designate
a suitably qualified and experienced person as Compliance
Officer on a countrywide basis, who in turn will appoint COs
down the line. The COs will primarily be responsible
for bank/DFI’s effective compliance relating to (a) State
Bank Prudential Regulations, (b) relevant provisions of existing
laws and regulations, (c) guidelines for KYC, (d) anti money
laundering laws and regulations, (e) timely submission of
accurate data/returns to regulator and other agencies and
(f) monitor and report suspicious transactions to President/CEO
of the Bank/DFI and other related agencies. The Banks/DFIs
are, however, be free to add other areas of compliance under
the responsibilities of CO and consider setting up of a Compliance
Committee under CO, as they may deem fit, to protect the interest
of the institution.
3.
The CO will (i) serve as a contact point between President/CEO
and senior management, with regard to functioning of the compliance
programme, (ii) provide assistance in this area to branches
and other departments of the bank, and (iii) act as
liaison with SBP concerning the issues related to compliance.
4.
Banks/DFIs are, therefore, advised to put in place, in writing,
a complete programme of compliance down the line under the
supervision of a Compliance Officer. A compliance report
in this regard alongwith name, contact and address of the
CO and a copy of that Bank/DFI’s compliance programme may
be furnished to SBP latest by 31st October 2003.
5.
Please acknowledge receipt
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